Company Perspectives:

Aerojet, a GenCorp company, is a major aerospace/defense contractor specializing in missile and space propulsion, and defense and armaments. Since the company was founded in 1942, it has led the way in the development of crucial technology and products that have kept America strong and furthered man's exploration of space.

Key Dates:

1942:

Aerojet is formed; works on jet-assisted takeoff.

1953:

Rancho Cordova plant is established.

1958:

Employment reaches 34,000.

1969:

Aerojet rocket motors propel astronauts to the moon.

1988:

Sales reach high of $1 billion, before declining due to downsizing and divestment in the coming decade.

1994:

Munitions business is sold to Olin Corp.

2001:

Aerojet tests world's largest monolithic rocket motor.

2002:

Acquisitions double Aerojet in size.

Company History:

Aerojet-General Corp. is a leading U.S. rocket propulsion company. Founded during World War II, Aerojet has supplied most of the space programs in the United States, including the Apollo rockets and Space Shuttle, and has produced thousands of munitions for the military. The company is a subcontractor for body panels on advanced aircraft programs. Aerojet's satellite sensing technology detects missile launches as well as changes in the environment. Its high-tech research has spawned spinoffs in medical and other fields.

World War II Origins

Aerojet-General Corp. began by making jet-assisted takeoff (JATO) rockets in World War II. They were first demonstrated on August 16, 1941, by a group of enthusiasts from the California Institute of Technology led by professor Theodore von Karman. These provided an extra boost for aircraft taking off from short runways and aircraft carriers.

The company was incorporated March 19, 1942, as Aerojet Engineering Corp., and received its first production contract three months later. The first plant was located in Pasadena, California.

General Tire and Rubber Company, forerunner to GenCorp, was an early investor, acquiring the company in 1948. Aerojet produced thousands of JATO units during World War II.

In the spring of 1945, a number of scientists from Germany's V-2 rocket program surrendered to U.S. forces. Some of them, like Rudi Beichel, began working for Aerojet. Beichel is credited with leading the team that designed the Redstone rocket that Alan Shepard, Jr., rode into space in 1961.

Demand, production, and employment were cut back sharply following the war's end. However, some of the propeller-driven civilian airliners of the day could be fitted with JATO units to allow them to take off in the thin air of high elevation airports.

According to company literature, Aerojet became the first major U.S. company to develop expertise in both liquid and solid propellant rockets. The company was also responsible for the first U.S. rocket to probe the edge of space. The Aerobee class (eventually designated the X-8 series by the Air Force), launched in 1947, was used for decades.

Closing the Missile Gap

Aerojet employed nearly 2,800 people in 1952, when sales were $21 million. In 1953, the company established a weapons plant in Rancho Cordova, near Sacramento, California. Two years earlier, as the community of Pasadena grew around its original facility, the company had begun buying enough land for the new plant to isolate it from future development. The plant would be considered the free world's largest rocket engine facility.

Aerojet was called the "General Motors of U.S. Rocketry" by Time magazine in 1958; five years later, the company employed 34,000 people working on missiles such as the Polaris, Minuteman, Trident, and Titan. Revenues were $605 million in 1962.

In 1959, the company created two new divisions: Ordnance and Electronic Systems. The Electronic Systems Division created infrared technology allowing satellites to observe missile launches around the world--a vital component of U.S. defense during the Cold War. In May 1959, Aerojet bought a Downey, California defense business from the Rheem Corporation. This was combined with a small defense operation acquired three years earlier to form the Ordnance Division.

Space Race and Vietnam

In the 1960s, Aerojet built a plant near the Everglades to supply NASA with solid fuel rockets. It was closed after NASA chose liquid fuel for the Saturn V program.

Aerojet powered many of the rockets used in the Apollo program, culminating in the first moon landing on July 20, 1969. The company was also developing its microwave and infrared sensing systems, used to monitor weather and the environment from satellites. At the same time, Aerojet was mass producing rockets and other ordnance for the Vietnam Conflict.

Employment fell to 8,000 by the early 1970s. Aerojet worked with Textron Inc. unit Bell Aerospace Co. to develop a pair of experimental surface-effect ships for the U.S. Navy in the early 1970s, but dropped out of the program.

More enduring were contracts for the Combined Effects Munitions program and 30mm ammunition. Aerojet began producing depleted uranium rounds after the 1976 acquisition of a factory in Jonesborough, Tennessee.

Aerojet-General Corp. earned $25.5 million on revenues of $670 million in 1975. Aerojet had 14 operating companies, according to Business Week, including Aerojet Electrosystems, Barnard & Burk Inc. (energy-related construction and engineering), Chemical Construction Corp., CESSCO (oil tanks), Cordova Chemical Co., Howe Richardson Scale Co., and Liquid Rocket Co. Aerojet acquired Chemical Construction Corp., a builder of natural gas plants, in a bid to diversify from government defense contracts. Other subsidiaries produced chemicals, pumps, and valves. A food flavorings unit, H.A. Johnson Co., was sold to Sands, Taylor & Wood of Cambridge, Massachusetts, in February 1975.

Company President Jack H. Vollbrecht embraced an "80-20" system, reported Business Week, urging managers to spend most of their time on the most important matters. Jack L. Heckel replaced Vollbrecht as president in 1981, and was named chairman and CEO in 1984.

Booming in the Reagan Era

Sales were $349.4 million in 1980, with earnings of $26.6 million. The Reagan era defense buildup was just beginning. Aerojet was a supplier of solid fuel propulsion systems for the new MX missile system, among other projects. While rival Morton Thiokol Inc. won the initial contract to build solid fuel booster rockets for the Space Shuttle, Aerojet would supply the liquid fuel maneuvering engines. Aerojet also designed and produced elements of the Strategic Defense Initiative, a system designed to intercept incoming ballistic missiles.

In the early 1980s, Aerojet's corporate parent, General Tire, was, according to Business Week, considering spinning off its many holdings into three separate companies in order to raise its share price. Aerojet itself was divesting some of its subsidiaries as it refocused on its lucrative aerospace business. The General Tire and Rubber Company became GenCorp. in the mid-1980s.

Aerojet's 13,500-acre complex near Rancho Cordova, California, was designated a Superfund site by the Environmental Protection Agency in 1983, and the company was forced to spend millions treating the groundwater underneath it. Since the 1960s, it had been poisoned by 30 different types of contaminants, alleged one lawsuit by a local water supplier. Aerojet would commit to a $100 million cleanup program of its Rancho Cordova site even before the discovery of perchlorate contamination prompted the closure of 18 wells in California in 1997. (A 1992 report by the General Accounting Office estimated the potential total cleanup cost to be up to $1 billion.)

Aerojet had begun applying some of its technology to medical applications, such as a cryogenic brain probe. The company also had an artificial heart research program, which was spun off in the mid-1980s as Nimbus Inc. Aerojet employees formed a number of other enterprises, such as Clean Energy Systems, launched in 1993 to apply Rudi Beichel's ideas for developing steam power using rocket technology.

Aerojet reached sales of $1 billion in 1988, when it had 8,000 employees. A slowdown in defense spending soon resulted in layoffs and factory closings. During the year, the company traded 5,100 acres in the Everglades to the federal government for 53,000 acres near its testing site in Nevada.

In 1989, NASA chose Aerojet and Lockheed Corporation to produce solid fuel rocket motors for the Space Shuttle program, replacing Morton Thiokol Inc., which had been dropped after the Challenger disaster. However, the booster rocket replacement program was canceled by Congress in October 1993. Aerojet was researching a cleaner, nitrate-based oxidizer for solid rocket motors, which until then left a noxious trail of hydrogen chloride exhaust.

1990s Cutbacks

Aerojet announced a reorganization in May 1990. Its two Sacramento propulsion units were combined into the Aerojet Propulsion Division. Three other divisions were renamed: Aerojet Space Boosters, which was producing advanced solid rocket motors (ASRM) for the Space Shuttle, was renamed the Aerojet ASRM Division; Aerojet ElectroSystems, based in Azusa, California, became the Aerojet Electronics Division; and Downey, California-based Aerojet Ordnance became the Aerojet Ordnance Division.

Aerojet's satellite technology was used to detect Iraq's Scud missile launches during the Persian Gulf War. Aerojet also supplied cluster bombs for the war effort; in 1994 it and the only other supplier, Alliant Techsystems Inc., were fined for price fixing related to these armaments.

In 1993, Aerojet unveiled a refueling system for natural gas vehicles. It used mobile fuel tanks constructed of high-tech composite materials. In the 1993 fiscal year, sales were $872 million, down from $1.1 billion, but they still accounted for nearly half of the parent company's total revenues. Aerojet employed 5,000 people in the early 1990s. The company trimmed 1,250 jobs in 1993; cutbacks at NASA resulted in the layoffs of another 650 workers in 1994.

Portions of the munitions business were sold to Olin Corporation of Stamford, Connecticut. In December 1994, GenCorp announced it would sell the rest of Aerojet as well. At the time, Aerojet had 1,350 employees at its electronics plant in Azusa, California, and 1,650 at its propulsion plant near Sacramento. The sale of Aerojet was not completed, however.

New Ventures in the Late 1990s and Beyond

Aerojet was developing new lines of business in the late 1990s. The company had won contracts to supply fuselage panels for the new F-22 Raptor fighter, but the long-running Peacekeeper missile program was canceled.

Aerojet Fine Chemicals was one of Aerojet's fastest growing new ventures. The unit manufactured chemicals for pharmaceutical companies. By 1999 sales were $45 million a year. In 2000, Aerojet Fine Chemicals was partially merged with Pharbil Technologies, an investor group associated with Donaldson, Lufkin & Jenrette Inc. GenCorp bought back ownership of Aerojet Fine Chemicals one year later.

A space propulsion joint venture with United Technologies Corp.'s Pratt & Whitney unit was discussed in 2000 but not consummated (Aerojet's environmental cleanup costs were one factor cited in the press). The rocket-propulsion industry, which then had a half-dozen competitors, was consolidating due to shrinking demand and excess capacity.

In 2001, Northrop Grumman Corporation bought Aerojet's Electronic and Information Systems (EIS) business for $315 million. EIS had 2000 revenues of $323 million, but was considered too small to compete with prime contractors such as Boeing, Lockheed-Martin, and TRW. It employed about 1,350 people, most of them near Los Angeles. EIS was merged into Northrop's Space Systems Division.

In August 2001, Aerojet successfully test fired the world's largest one-piece rocket motor to date. It was built for Lockheed Martin's Atlas V rocket.

A 2,600-acre section of the Rancho Cordova property was removed from Superfund status in 2002 and was slated to be commercially developed. Aerojet sold the Lake Natoma Office Park located on this property in August 2003.

Major Acquisitions in 2002 and 2003

Aerojet made a couple of acquisitions that together doubled its size. In late 2002, it paid $93 million for General Dynamics' Ordnance and Tactical Systems Space Propulsion and Fire Suppression unit, based in Redmond, Washington, which employed 300 people and had sales of about $60 million a year. Renamed Aerojet Redmond after the acquisition, this company had been founded in 1968 as Rocket Research. It specialized in small thrusters used to guide satellites in space.

The space propulsion business of Atlantic Research Corp. (ARC) was acquired in the summer of 2003 for $133 million. ARC's propulsion unit had sales of $150 million a year and 900 employees. The addition of the two programs expanded Aerojet's range of offerings, including more rockets for the Space Shuttle program. Aerojet was also involved in the propulsion systems behind the Mars rovers Spirit and Opportunity. Aerojet's profits slipped 2.3 percent to $43 million in 2003 as revenues rose 18 percent to $321 million.